Sensex Falls, Suzlon Earnings Rise

123jump.com Staff
20 May, 2008
New York City

Mumbai stocks fell after the worries of the rising inflation and crude oil prices kept investors cautious. Comments from the Governor of RBI suggested that rates may be raised to combat inflation that may be higher than tracked by the indexes. Suzlon, the largest wind turbine manufacturer reported 29% rise in earnings o 69% rise in sales. Rising crude oil prices forced rupee lower to 42.59 against the U.S. dollar.

[R]10:00AM New York, 7:30PM Mumbai – The RBI Governor commented that inflation index may understate the underlying inflation. Suzlon fourth quarter earnings rose 29% on 69% rise in revenue.[/R]

Market Sentiment

Governor of the Reserve Bank of India Y.V. Reddy suggested that inflation felt by consumers may be higher than average estimated by the indexes and the current rate of inflation is unacceptable. The comments fueled speculation that interest rates may be tightened at the next meeting.

At close of Tuesday''s trades, the benchmark index, Sensex fell 1.17% or 204.76 at 17,230.18. On the National Stock Exchange, the S&P CNX Nifty closed 1.02% lower or 52.75 to 5,104.95. Banking, healthcare and realty stocks slipped into the red.

Of the BSE traded shares, 1,431 shares gained, 1,292 declined and 66 shares remained unchanged. Among the 30-member Sensex pack, 23 shares declined while 7 shares remain unchanged.

Inflation felt by consumers may be higher

The Reserve Bank of India Governor Yaga Venugopal Reddy said on Monday that consumers may experience higher inflation than tracked by the indexes as different people have a different consumption basket. The latest read for India''s wholesale price index showed a rise of 7.83% in the week ended May 3, the highest since November 2004.

Economists, say the actual rate may be closer to 9%.

India, Asia''s third largest economy releases wholesale price inflation statistics on a weekly basis. Preliminary reading on inflation at the end of March 8 was revised up to 7.78% from 5.92%.

To calm inflation, India''s central bank tightened liquidity on April 29 by announcing an increase in its cash reserve ratio of 25 basis points to 8.25%. But key interest rates were left unchanged.

Gainer and Decliners

Reliance Industries declined 1.3% to 2,602 rupees on news reports that the company has entered into a joint venture valued at $1 billion joint venture with Vornado Realty Trust based in the U.S. to set up a real estate fund that will invest in realty projects across India.

Consumer durables stocks traded mixed. Titan Industries fell 4.8% to 1,212.40 rupees, Gitanjali Gems was down 2.9% to 297.05 rupees and Videocon Industries traded lower at 16.9% to 410.35 rupees.

State Bank of India declined 2.95% to 1,655.45 rupees after the company announced it has decided to stop giving loans for the purchase of tractors and other farm equipment.

Maruti Suzuki vehicle prices up

Maruti Suzuki of India has raised prices of its products across various models between 1,000 and 18,000 rupees as it passes it on the rising cost of steel and other metals.

The price of Swift Dzire, its latest model has been increased by 18,000 rupees. The introductory price for the sedan is now ranges between 4.49 lakhs rupees and 6 lakhs rupees depending on the models and options chosen.

The company has also increased prices of select Swift model by 9,000 rupees along with SX4 and Gypsy models and the Swift diesel version price has been raised by 15,000 rupees.

Prices of all models of Zen Estilo and WagonR LPG are increased by 1,000 rupees while Alto and M800 has been increased by 1,500 rupees. Omni and WagonR Petrol model prices have been increased by 2,000 rupees and that of multi-utility vehicle Versa by 8,000 rupees.

World markets

In London FTSE 100 Index closed lower 184.90 or 2.90% to 6,191.60, in Paris CAC 40 Index decreased 87.22 or 1.70% to close at 5,054.88 and in Frankfurt DAX index lower 107.44 or 1.49% to close at 7,118.50. In Zurich trading SMI decreased 152.35 or 1.96% to close at 7,626.58.

In Tokyo Nikkei 225 Index closed lower 109.52 or 0.77% to 14,160.09, in Hong Kong Hang Seng index decreased 572.77 or 2.23% closed to 25,169.46. In Australia ASX 200 index lower 41.30 or 0.69% to close 5,908.10. In Malaysia KL Composite index decreased 13.24 or 1.02% closed to 1,287.43.

In South Korea Kospi Index decreased 12.22 or 0.65% to close at 1,873.15, in Thailand SET index closed higher 3.49 or 0.40% to 873.82. Sensex index in India decreased 204.76 or 1.17% to 17,230.18. Market of Indonesia was closed today.